Thursday, July 9, 2015

Simmons of Zions Bancorporation Testifies on SIFI Designation Burden

In a hearing on SIFI designations, Harris Simmons, Chairman and CEO of Zions Bancorporation, testified before the House Subcommittee on Financial institutions and Consumer Credit. Zions, the smallest of the SIFIs, has incurred $20 million in direct expenses related to Dodd Frank Act Stress Testing (DFAST) and Comprehensive Capital Analysis and Review (CCAR) over the past two years. The bank expects to spend over $200 million on projects to ensure full compliance with stress testing and liquidity management protocols applied to SIFIs.

I view stress testing as a fundamentally important tool in the management of a bank’s risk and the assessment of its capital adequacy. The value of the insights it yields, however, does not increase in linear proportion to the investment made in the exercise, and this is particularly true for the smaller and less complex regional banking institutions.

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